empty
18.03.2025 07:43 PM
EUR/USD Analysis – March 18th

This image is no longer relevant

The wave structure on the four-hour chart is at risk of transforming into a more complex formation. A new downward wave structure began forming on September 25, taking the shape of an impulse five-wave sequence. Two months ago, a corrective upward wave began developing, which should consist of at least three waves. The first wave structure was quite clear, leading me to expect the second wave to take on a similarly defined form. However, its size has grown so large that the entire wave structure may undergo a significant transformation.

From an economic data perspective, the fundamental backdrop continues to favor sellers over buyers. Recent U.S. economic reports have consistently demonstrated that the economy is not experiencing major issues and is not slowing to levels that would cause concern. However, the situation could change significantly in 2025 due to the policies of Donald Trump. The Federal Reserve may cut interest rates multiple times, while tariffs and retaliatory measures could harm economic growth. If not for recent events, I would have expected a 90% probability of further euro depreciation. However, this outcome is still possible.

The EUR/USD rate remained virtually unchanged on Tuesday, with the market reacting to both positive and negative reports.

The day began with the ZEW economic sentiment indices for Germany and the Eurozone, both of which exceeded market expectations, especially in Germany. While these reports are not particularly significant, the market had a valid reason to increase demand for the euro.

Later in the day, U.S. housing data was released, including building permits and new home sales. Both reports exceeded expectations, leading to a brief increase in dollar demand. At first glance, the market reacted logically, with EUR/USD adjusting to reflect the latest economic data.

However, the bigger issue for the U.S. dollar is that overall demand remains weak, regardless of economic indicators. While the dollar strengthened by 45 basis points during the day, it could lose twice as much by the end of the session, as the market continues to react negatively to Trump's foreign policy. Many forex traders and investors simply do not believe in the strength of the U.S. economy and anticipate a recession. As a result, they continue offloading U.S. dollars, stocks, and other U.S.-linked assets.

This image is no longer relevant

Key Takeaways

Based on my EUR/USD analysis, the pair remains in a downward trend, though it could soon transition to an uptrend. The second corrective wave may be nearing completion, but if prices continue rising, the entire wave structure could change. Since the current wave pattern is uncertain, I cannot recommend short-selling at this time, even though current price levels appear highly attractive for selling—but only if the wave structure remains unchanged.

Donald Trump's policies could further reduce demand for the U.S. dollar, making it impossible for a third wave to form.

On a higher wave scale, the structure has shifted to an impulse pattern. A new long-term downward sequence may be forming, but Trump's political decisions could upend the technical outlook at any moment.

Core Principles of My Analysis

  1. Wave structures should be simple and clear. Complex formations are difficult to trade and are prone to frequent changes.
  2. If market conditions are uncertain, it is better to stay out of the market.
  3. There is never 100% certainty in market direction. Always use Stop-Loss orders for protection.
  4. Wave analysis can be combined with other technical methods and trading strategies.
Chin Zhao,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD Analysis on April 23, 2025

The wave structure on the 4-hour chart for EUR/USD has transitioned into a bullish, impulsive formation. I believe no one doubts that this transformation occurred solely

Chin Zhao 18:44 2025-04-23 UTC+2

GBP/USD Analysis on April 23, 2025

The wave structure on the GBP/USD chart has also shifted to a bullish, impulsive form — "thanks" to Donald Trump. The wave pattern is nearly identical to that of EUR/USD

Chin Zhao 18:40 2025-04-23 UTC+2

GBP/USD Analysis on April 22, 2025

The wave pattern on the GBP/USD chart has also transformed into a bullish, impulsive structure — all "thanks" to Donald Trump. The wave pattern is nearly identical to that

Chin Zhao 20:05 2025-04-22 UTC+2

EUR/USD Analysis on April 21, 2025

The wave structure on the 4-hour chart for EUR/USD has transformed into a bullish formation. I believe there's little doubt that this transformation occurred solely due to the new U.S

Chin Zhao 19:46 2025-04-21 UTC+2

GBP/USD Analysis on April 21, 2025

The wave structure for GBP/USD has also transformed into a bullish, impulsive formation—"thanks" to Donald Trump. The wave picture is nearly identical to that of EUR/USD. Up until February

Chin Zhao 19:44 2025-04-21 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for GBP/USD, AUD/USD, USD/CHF, EUR/JPY, AUD/JPY, and the US Dollar Index — April 21st

GBP/USD Analysis: Since the beginning of this year, GBP/USD has been forming an upward wave on the daily chart. The pair has now reached the boundaries of a wide potential

Isabel Clark 09:31 2025-04-21 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for EUR/USD, USD/JPY, GBP/JPY, USD/CAD, NZD/USD, and Gold – April 21st

Analysis:Since February, EUR/USD has been forming an upward wave, with the final part (C) currently in progress. Recently, the pair pushed through the lower boundary of a strong potential reversal

Isabel Clark 09:25 2025-04-21 UTC+2

EUR/USD Analysis on April 17, 2025

The wave structure on the 4-hour EUR/USD chart has shifted into a bullish impulse formation. I believe there's no doubt this transformation occurred solely due to the new U.S. trade

Chin Zhao 19:12 2025-04-17 UTC+2

GBP/USD Analysis on April 17, 2025

The GBP/USD pair remained unchanged on Thursday. While such market behavior might have been expected for Thursday, it was surprising not to see a decline on Wednesday, given the number

Chin Zhao 19:09 2025-04-17 UTC+2

Analysis for EUR/USD on April 16, 2025

The wave structure on the 4-hour chart for the EUR/USD pair has shifted into a bullish formation. I think there's little doubt that this transformation was caused solely

Chin Zhao 18:56 2025-04-16 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.